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UT Knoxville BUAD 331 - Retailers Seek U.S. Help With Shipping Crisis - WSJ

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9/6/16, 8:52 AMRetailers Seek U.S. Help With Shipping Crisis - WSJPage 1 of 4http://www.wsj.com/articles/hyundai-ships-take-cargo-delayed-by-riva…jins-bankruptcy-protection-filing-1472747412?mod=djemRiskComplianceU.S. retailers, bracing for a blow as they stock up for the crucialholiday sales season, asked the government to step in and help resolvea growing crisis caused by the near-collapse of South Korea’s HanjinShipping Co., one of the world’s largest container shipping companies.“While the situation is still developing, the prospect of harm issignificant and apparent,” Sandra Kennedy, president of the RetailIndustry Leaders Association, wrote in a letter to the Department ofCommerce and the Federal Maritime Commission. Hanjin’s recentbankruptcy filing “presents an enormous challenge to U.S. shippers,”she said, and “could have a substantial impact on consumers and theeconomy at large.”The trade group is urging the U.S. to work with ports, cargo handlersand the South Korean government to resolve the widespreaddisruption in freight shipments caused by the Hanjin bankrupcyfiling. A spokesman for the Retail Industry Leaders Association saidthey’re hoping the South Korean government could help provideclarity and speed to the bankruptcy proceedings, which are beingThis copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visithttp://www.djreprints.com.http://www.wsj.com/articles/hyundai-ships-take-cargo-delayed-by-rival-hanjins-bankruptcy-protection-filing-1472747412BUSINESSRetailers Seek U.S. Help WithShipping CrisisRates soar as Hanjin Shipping’s bankruptcy filing strands goods, causes confusion at portsStacks of shipping containers sit at a pier run by Hanjin Shipping Co. in Busan, South Korea, onThursday. PHOTO: YONHAP/EUROPEAN PRESSPHOTO AGENCYUpdated Sept. 1, 2016 11:59 p.m. ETBy PAUL ZIOBRO and COSTAS PARIS9/6/16, 8:52 AMRetailers Seek U.S. Help With Shipping Crisis - WSJPage 2 of 4http://www.wsj.com/articles/hyundai-ships-take-cargo-delayed-by-riva…jins-bankruptcy-protection-filing-1472747412?mod=djemRiskComplianceconsidered by courts there.Hanjin handles about 7.8% of the trans-Pacific trade volume forthe U.S. market, Ms. Kennedy’s letter said. Since the shippingcompany filed for bankruptcy protection in a Seoul courtWednesday,terminal operators, ports, cargo handlers, truckers and others haverefused to handle its cargo, for fear they won’t get paid. That is causingturmoil at U.S. ports and beyond, said shippers, importers and freightforwarders.U.S.-bound cargo has been delayed at the point of origin, and cargo-laden Hanjin ships are unable to get into U.S. ports. Already deliveredcargo is sitting unhandled, clogging ports and occupying containersneeded elsewhere.Several Hanjin ships have been seized by creditorsor barred from shipping cargo from Busan, South Korea’s main port,and vessels have been turned away from ports in the U.S., China,Canada, Spain and elsewhere.Anofficial at the Korea International Trade Association said about 10Hanjin vessels were either seized or denied access at Chineseterminals in Shanghai and Tianjin over the past 48 hours.The ships were seized after legal action by shipowners who leasedthem to Hanjin and didn’t get charter fees, workers who didn’t getpaid, terminals which weren’t paid docking fees and bunker fuelsuppliers.Earlier in the week another Hanjin vessel was seized in Singapore.Because Hanjin is part of an alliance of six shipping companies, theproblems are even more widespread.Freight brokers in Asia said about 540,000 containers are expected toface delivery delays that one of them said could range from a few daysto more than a month.Shipping rates soared as freight capacity shrank overnight. Cargoowners said rates from Busan, South Korea, to Los Angeles had risento $2,300 a container by Thursday, up from $1,700 four days earlier.One U.S. importer said he was getting rate quotes of $2,000 aEARLIER COVERAGEHeard on the Street: Hanjin’s Demise: Why Global Shipping Glut Isn’t Going AwaySouth Korea’s Hard Line on Hanjin Shipping Signals New AttitudeHanjin’s Bankruptcy Filing Upsets Global Trade (Aug. 31)The Global Forces Behind Korea’s Shipping Collapse (Aug. 31)Hanjin Shipping Nears Bankruptcy After Creditors End Support (Aug. 30)9/6/16, 8:52 AMRetailers Seek U.S. Help With Shipping Crisis - WSJPage 3 of 4http://www.wsj.com/articles/hyundai-ships-take-cargo-delayed-by-riva…jins-bankruptcy-protection-filing-1472747412?mod=djemRiskCompliancecontainer, compared with $700 before the Hanjin news.The turmoil can only aggravate problems for retailers grappling withthe challenges and high costs of e-commerce and at a crucial time.Those most likely to be affected include Wal-Mart Stores Inc., TargetCorp., J.C. Penney Co. and clothing retailers.A Home Depot Inc. spokesman said Hanjin isn't its only carrier so itdoesn’t expect a material impact. The company is working throughcontingency plans, he said.A Target spokeswoman said the retailer is watching developmentclosely and assessing the situation.Marilee McInnis, a spokeswoman for Wal-Mart, said, “Right now, weare waiting to hear the final determination on bankruptcyproceedings and the implications to their current assets before wewill be able to assess any impact.”The $25 billion U.S. toy industry has been sweating the Hanjin news,as it prepares for the holiday season, which accounts for half itsannual sales.Jeff Bergmann, managing director of the Toy Shippers Association,said his customers are fortunate that only about 20 containers are onHanjin or affiliated vessels. They’ve been told their freight will bedelivered to the ports, but from there, “nobody knows,” Mr. Bergmannsaid.Beyond that, the general concern is how long the turmoil will last.“The ripple effect could be tremendous,” he said.Jessica Dankert, senior director at the Retail Industry LeadersAssociation, said the congestion is coming during one of the worsepossible times for retailers as they stock up before the critical holiday-shopping season. “These concerns would be trouble at any time, butthis is a particularly bad time for it to happen.”She saidretailers areconsidering contingency plans that include using other carriers andworking to get their cargo released.Reclaiming cargo won’t be easy.9/6/16, 8:52 AMRetailers Seek U.S. Help With Shipping Crisis - WSJPage 4 of


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UT Knoxville BUAD 331 - Retailers Seek U.S. Help With Shipping Crisis - WSJ

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